This invention relates to a computer-based auction and sale system for the selling or purchasing of products and services via an electronic auction and sale system through the use of remote terminals.
With the increasing popularity of the internet, computer-based systems have become an extremely popular method for buying and selling a variety of products. U.S. Pat. No. 5,960,411 to Hartman et al. discloses a method and system for making purchase orders over a communication system which may be used in conjunction with a computer-based auction system. U.S. Pat. No. 5,895,454 to Harrington discloses an integrated interface for vendor/product oriented Internet websites which may be used in conjunction with a computer-based auction system. Auction systems allow buyers to obtain products at competitive prices with the additional excitement and skill of the buyer who participates in the auction process and makes fast decisions whether to participate or to recognize the price has become too high. The standard auction process involves users bidding for a particular product, and the product is sold to the highest bidder.
One type of computer based auction for the sale of products utilizes e-mail sent over the internet. In this case, bidders send e-mail to the auction site with details of their bid and identity. Details of the bid are posted on the auction site and are available to other participants. The auction process typically has a time period of several days or weeks, and the product is sold to the highest bidder. One of the advantages of this system is the lack of complexity in running of the auction process over the internet where e-mail is used to communicate with the auction computer.
Computer-based auctions can also be conducted entirely over the Internet. U.S. Pat. No. 5,905,975 to Ausubel discloses a computer implemented method and apparatus for auctions and U.S. Pat. No. 6,012,045 to Barzilai discloses a computer-based electronic bid, auction and sale system. U.S. Pat. No. 5,966,699 to Zandi discloses a system and method for conducting loan auctions over computer networks. These disclosures may be used in conjunction with the present invention. With a typical auction, the seller provides information about the item, a very low initial starting price, a time when bidding will be closed and optionally, a reserve price that is only disclosed to the auction software and not available to bidders. Bidding proceeds as bidders incrementally raise the bid price as the bidding progresses. At the close of bidding, the high bidder obtains the product for the amount bid. However, if at the time of putting the product up for auction, the seller had included a reserve price that was higher than the high bid, the seller has the option of not selling the product to the high bidder. At the time a bidder, say Bidder No. 1, submits the incrementally high bid, Bidder No. 1 may also provide a maximum bid that is only disclosed to the auction software and not disclosed to other bidders or the seller. As other bids are received, the auction software will automatically incrementally increase Bidder No. 1""s bid as necessary to remain the high bidder. This bid amount will not be increased above Bidder No. 1""s maximum bid. In this manner, Bidder No. 1 will not have to constantly monitor the bidding process. Typically, the auction software will then notify the bidder by e-mail when they are no longer the high bidder. Computer-based auctions are popular because of the large number of buyers that can participate on an individual auction. Bidding often extends over a period of several days to allow time for a number of buyers to find the item. Typically there is a flurry of activity in the last portion of the auction process.
Another form of computer-based auction is the reverse auction where the price of the product decreases in a set manner during the time period of the auction and each participant is provided with the current price, the quantity on hand and the time remaining in the auction. U.S. Pat. No. 5,890,138 to Godin, et al, discloses a computer-based reverse auction process. This type of auction, typically, takes place over a very short period of time and there is a flurry of activity in the last portion of the auction process. The auction terminates when there is no more product to be sold or the time period expires.
Computer-based auctions are popular because, as in auctions generally, if the reserve price is met, a seller can be relatively certain of finding a buyer for the product. In addition, if a seller finds a high level of interest in an item, multiple bidders can produce very good selling prices for the seller. Buyers, on the other hand can often obtain a product at a favorable price.
The disadvantage of the disclosed auctions is that when the seller obtains a better than expected selling price it typically means the bidder overpaid. On the other hand, if the bidder obtained a really good deal, it probably means the seller had to take a price less than they would have liked. There may be circumstances when a party is highly motivated and is very pleased at selling a product at a low price or buying a product at a relatively high price, however generally any highly favorable selling price to one party must come at some expense to the other party. One approach to address this issue is described under U.S. Pat. No. 5,794,207 to Walker which discloses a buyer-driven network system for purchase of goods and services.
One popular method used by consumers to reduce the purchase price for individual items is to join buying clubs. In this manner, each member pays a membership fee to the buying club. This fee helps defer the costs of products and, probably more importantly, assures the buying club that the members will actually purchase from the club. The buying club, representing many individuals, is in a favorable negotiating position as a buyer and can make use of volume discounts and obtain favorable prices from producers. The consumer in exchange for the membership fee has the right to obtain the products the buying club purchases at the discounted prices. In this manner, a buying club can obtain selling prices that are favorable to both the buyer and seller.
The present invention provides the advantages of the computer-based auction process by incorporating a membership fee requirement into each purchase. These membership fees, also referred to as nonredeemable shares, can be aggregated among all the bidders to be used to pay the seller for a portion or up to the entire selling price the seller would accept for the product. Therefore the eligible bidders, having purchased the nonredeemable share, will be able to bid on the item with a relatively low or no reserve since the seller will already have received all or a significant portion of the reserve price from the eligible bidders.
It is an object of the present invention to provide a computer-based method of purchasing or selling products and services via a computer-based auction and sale system.
It is an additional object of the present invention to provide a computer-based method of purchasing or selling products and services that will allow purchase of the nonredeemable share to prequalify bidders for eligibility in the auction.
It is an additional object of the present invention to provide a computer-based method of purchasing or selling products and services that will utilize the aggregate membership fees or nonredeemable shares paid by all bidders to pay for all or a substantial portion of the auctioned product or service to the seller.
It is an additional object of the present invention to provide a computer-based method of purchasing or selling products and services that will utilize the aggregate membership fees or nonredeemable shares paid by all bidders to pay for all or a substantial portion of the transactional costs associated with operating the auction site for the use of the buyer and seller.
It is an additional object of the present invention to provide a computer-based method of purchasing or selling products and services that will utilize the aggregate membership fees paid by all bidders to allow the high bidder to obtain the product or service for a value substantially less than the amount received by the seller receives for the product or service.
It is an additional object of the present invention to provide a computer-based method of purchasing or selling products and services that can be used with a variety of auction systems or selling systems.
It is an additional object of the present invention to provide a computer-based method of purchasing or selling products and services that can be used to allow bidders to obtain items such as businesses, real estate, automobiles or luxuries that bidders normally could not afford to purchase outright without financing.
It is a further object of the present invention to provide a computer-based auction system wherein a nonredeemable share is purchased or a membership fee is collected from each bidder on a product, the aggregate membership fees are then credited towards paying for the product being auctioned.
It is a further object of the present invention to provide a computer-based auction and sale system wherein the computer system establishes a virtual showroom which electronically displays the products and services offered for sale and certain other information, such as the manufacturer""s suggested retail price, appraisal information, and bid cycle data which enables the potential purchaser or customer to view the product, view information regarding the product and place a bid or a number of bids to purchase the product.
It is an additional object of the present invention to provide a computer-based auction and sale system wherein the seller or bidder may develop strategic buying and selling methods. It is an additional object of the present invention to provide a computer-based auction and sale system wherein the seller or bidder may develop strategic buying and selling methods.
It is an additional object of the present invention to provide a computer-based auction and sale system wherein the selected buyer of the item is not necessarily the high bidder.
It is an additional object of the present invention to provide a computer-based auction and sale system wherein the seller will have confidence that the submitted are collectable bids and the sale will be consummated by the winning bidder when the auction is completed.
It is an additional object of the present invention to provide a computer-based auction and sale system wherein the seller may include members of the public, manufacturers, suppliers, wholesalers, retailers whom may or may not also be operators of the computer-based auction and sale system.
The present invention is directed to a method of auctioning products on-line where participants use computer terminals to access a computer site and participate. The present invention provides advantages to existing computer-based auction processes by incorporating a nonredeemable share or membership fee requirement into each purchase. These fees can then be used to pay the seller up to the entire amount needed for the product as well as to cover transactional costs associated with conducting the auction. Since the seller will already have received all or a significant portion of the reserve price through the eligible bidders having purchased the nonredeemable share or paid the membership fee, the bidders will be able to bid on the item without a substantial reserve. This method is amenable to any computer-based auction whereby the bidders can be limited to a group of prequalified bidders. This invention can be used with the conventional consecutive open bid auction by using an open process and allowing the prequalified bidders to bid consecutively increasing amounts on the item. The invention can also be used on a sealed bid type auction where all bidders submit a bid amount which is undisclosed until a predetermined time at which time all bids are reviewed and the item awarded to the high bidder. The invention can also be used for a reverse auction whereby again the only bidders in the auction would be those that prequalified by purchasing the nonredeemable share or paying the membership fee for participating in the auction.
The present invention is not only usable with conventional auction systems, but can also be used with innovative auction systems such as auction systems that award the product to a 1) prequalified bidder on a random basis, 2) a bidder that is not the highest bidder, such as the second highest bidder, or 3) the bidder that is closest to a benchmark that is unknown at the time of bidding, such as the bidder closest to the 50th, 75th or 90th percentile of all the bids.
The method comprises allowing sellers to list their items for sale on the auction site, maintaining a computer database of items to be auctioned, allowing visitors to the site to register as prequalified bidders, maintaining a list of prequalified bidders to participate as members in each product auction and carrying out the auction among the prequalified bidders at the designated time.
This method is particularly advantageous for buyers and sellers of high cost items such as businesses, real estate and expensive luxuries, since the funds generated from both the high bidder and the share price or membership fees collected to prequalify all the bidders for the item can be used to pay the sellers asking price. A bidder only risks a relatively small amount as a share price or membership fee for an opportunity to obtain an item that may otherwise either by unaffordable item or require financing.
For each product to be auctioned the seller of the item would provide a description and image of the item to be sold. The seller would also designate the time to initiate bid posting, establish the nonrefundable share price and establish the required numbers of share sales would be sold before the buyer is determined. During the period before bids are accepted, the product would be promoted and interested potential bidders would be registered. The bidding period would begin at the designated time and last until the predetermined number of shares were sold. If the designated time has elapsed before the required number of shares had not been sold, the seller would have the option of closing bidding and selecting a buyer according to the criteria, extending the time period to accept bids, or deciding not to sell the item. If the item was not sold, all bidders would be reimbursed for their share price.
The bidders would pay for the nonrefundable shares with a credit card, but payment could also be accomplished with a debit card, prepaid account, e-cash, check or other means. The bidder that is selected as the buyer may either pay the bid amount as described of may have made financing arrangements for the bid amount.
Therefore, the foregoing is considered as illustrative only of the principles of the invention. Further, since numerous modifications and changes will readily occur to those skilled in the art, it is not desired to limit the invention to the exact construction and operation shown and described, and accordingly, all suitable modifications and equivalents may be resorted to, falling within the scope of the invention.